According to Market Regulation Services Inc. (MRS), an independent regulator for Canadian equity marketplaces, CIBC WM has agreed to pay C$700,000 for failing to provide adequate supervision of trading systems and procedures which could have detected manipulative and deceptive trading practices by clients between March and December 2002. Two employees – investment advisor Scott Mortimer and sales assistant Carl Irizawa – were fined a total of C$65,000 and C$27,500, respectively. All parties must pay costs to offset the investigation by MRS.
The charges against the firm and its employees assert that a group of clients with accounts at CIBC WM engaged in suspicious trading activities in stocks and warrants listed on the two exchanges. The manipulative trading was done through multiple venues including retail, RRSP, and Direct Market Access accounts, the market regulator said in a release.
“The [trading practices] generated red flags that should have been recognized by CIBC WM and its employees when they entered the [practices] and during the daily review of trading,” said Maureen Jensen, Vice-President of Market Regulation – Eastern Region at RS, in the release explaining the fines. “CIBC WM did not have adequate supervisory systems and procedures in place to detect manipulative and deceptive trading, which is considered one of the top risks to market integrity.”
Mortimer was the investment advisor for all clients in question, and Irizawa was his sales assistant.
MRS has referred its allegations to the Ontario Securities Commission, the independent regulator said in the release.